New super laws to increase elderly financial abuse, advisers required

Advisers will soon have to ramp up their estate planning financial advice, as the new superannuation laws will increase the likelihood of elderly people being financially abused, HLB Mann Judd has said.

Speaking at a media event in Sydney yesterday, HLB Mann Judd wealth management partner Michael Hutton said elderly people are at risk of being abused financially as a result of the new superannuation laws.

He said this issue is not going to “hit the consciousness” of the industry until people “start dying after the 1 July 2017”.

“That is, if you do have something like $3 million in super and $1.6 million is in pension and $1.4 million is in accumulation, there are ways to ensure that a spouse can take the $1.6 million that is in pension as a pension, but the $1.4 million will have to be taken out as a lump sum because a spouse can't move an amount over the pension limit to their own accumulation account,” Mr Hutton said.

“You can’t bequeath your superannuation money to stay in super unless it can be paid as a pension. You can't pay it out as a pension if you are over $1.6 million dollars. And I just think this is going to become quite problematic because the money has to come out of super and you're going to have 80 to 90 year-old widows and widowers having a big chunk of money in their bank account to deal with.”

Because of these changes, Mr Hutton expects there will be an uptick of elderly financial abuse.

“There are going to be some pretty bad stories in regard to elderly people blowing decent inheritances because of property spruikers and other people who target the elderly who will have these large sums of money,” he said.

“Elderly people are going to need advice around this, which I suppose is good for us, but I guess that is why it's going to be very important to have good estate planning financial advice.”